The government can reform the custom rate in the budget.Image Credit source: ChatGPT
Union Budget 2026: The budget countdown has started. Many things are coming to light regarding the preparations for the upcoming budget. According to people familiar with the matter, the government is considering reducing the number of customs duty slabs from the current eight to five or six in the upcoming budget. This change is being made with the aim of simplifying the tariff structure, reducing litigation and making import duty in line with the industrial and trade priorities of the country.
He said that the main objective of this process is to resolve disputes related to customs classification, correct inverted duty structures and reduce discretionary exemptions. These steps are being taken in view of the recently concluded and currently negotiated trade deals as well as efforts by the government to promote a paperless and streamlined customs system.
Preparation for big reform
The Central Government has been continuously focusing on reforming the customs structure for the last two years by reducing slabs and removing exemptions. A senior official said in a media report that there was a comprehensive reform in the customs structure in the last budget. There is scope to further reduce the customs duty slabs to five-six. He said that efforts in this regard have been going on for the last three-four months.
It is expected to be announced in this year’s budget. According to sources, the Central Board of Indirect Taxes and Customs (CBD) is making efforts to merge customs duties with the revised GST for a smooth and consistent system. He said that the department is working to resolve all the issues raised by businesses.
focus reducing conflicts
Quoting sources in the media report, it has also been said that the Central Government is trying to redefine the tariff structure between Special Economic Zones (SEZ) and Domestic Tariff Area. This is part of the broader SEZ reform. Officials said the entire focus of the government is to reduce disputes, which later become a major cause of litigation. According to a report by the Parliamentary Standing Committee on Finance, a total of 75,592 customs cases were pending in December 2024, with recoverable outstanding amount of Rs 24,016.20 crore.
He said that efforts in this regard have been going on for the last three-four months and it is expected to be announced in this year’s budget. The industry has advocated an amnesty scheme to reduce litigation in cases where the dispute does not relate to willful tax evasion. Finance Minister Nirmala Sitharaman had indicated last month that customs duty simplification would be the next major item on the government’s reform agenda.